CUSTODIAN CONTRACT
This Contract between Liberty-Xxxxx Xxx Advisor Floating Rate Advantage
Fund, a business trust organized and existing under the laws of the Commonwealth
of Massachusetts, hereinafter called the "Company", and State Street Bank and
Trust Company, a Massachusetts trust company, hereinafter called the
"Custodian",
WITNESSETH: That in consideration of the mutual covenants and
agreements hereinafter contained, the parties hereto agree as follows:
1. Employment of Custodian and Property to be Held by It
The Company hereby employs the Custodian as the custodian of its
assets, including loans and participation and other interests in loans ("Loans")
and securities (as used herein, the term "securities" shall include Loans) which
it desires to be held in places within the United States ("domestic securities")
and securities it desires to be held outside the United States ("foreign
securities"). The Company agrees to deliver to the Custodian all securities and
cash owned by it, and all payments of income, payments of principal or capital
distributions received by it with respect to all securities owned by the Company
from time to time, and the cash consideration received by it for such new or
treasury shares of capital stock ("Shares") of the Company as may be issued or
sold from time to time. The Custodian shall not be responsible for any property
of the Company held or received by the Company and not delivered to the
Custodian.
Upon receipt of "Proper Instructions" (within the meaning of Article
5), the Custodian shall from time to time employ one or more sub-custodians
located in the United States, but only in accordance with an applicable vote by
the board of trustees of the Company (the "Board"), and provided that the
Custodian shall have no more or less responsibility or liability to the Company
on account of any actions or omissions of any sub-custodian so employed than any
such sub-custodian has to the Custodian. The Custodian may employ as
sub-custodians for the Company's securities and other assets the foreign banking
institutions and foreign securities depositories designated in Schedule "A"
hereto but only in accordance with the provisions of Article 3.
2. Duties of the Custodian with Respect to Property of the Company
Held By the Custodian in the United States
2.1 Holding Securities. The Custodian shall hold and physically segregate
for the account of the Company all non-cash property, to be held by it
in the United States, including all domestic investments owned by the
Company, other than (a) securities which are maintained pursuant to
Section 2.10 in a clearing agency which acts as a securities depository
or in a book-entry system authorized by the U.S. Department of the
Treasury and certain federal agencies (each, a "U.S. Securities
System") and (b) commercial paper of an issuer for which the Custodian
acts as issuing and paying agent ("Direct Paper") which is deposited
and/or maintained in the Direct Paper System of the Custodian (the
"Direct Paper System") pursuant to Section 2.11.
2.2 Delivery of Securities. The Custodian shall release and deliver
domestic securities owned by the Company held by the Custodian or in a
U.S. Securities System account of the Custodian or in the Custodian's
Direct Paper book-entry system account ("Direct Paper System Account")
only upon receipt of Proper Instructions, which may be continuing
instructions when deemed appropriate by the parties, and only in the
following cases:
1) Upon sale of such securities for the account of the Company
and receipt of payment therefor;
2) Upon the receipt of payment in connection with any repurchase
agreement related to such securities entered into by the
Company;
3) In the case of a sale effected through a U.S. Securities
System, in accordance with the provisions of Section 2.10
hereof;
4) To the depository agent in connection with tender or other
similar offers for portfolio securities of the Company;
5) To the issuer thereof or its agent when such securities are
called, redeemed, retired or otherwise become payable;
provided that, in any such case, the cash or other
consideration is to be delivered to the Custodian;
6) To the issuer thereof, or its agent, for transfer into the
name of the Company or into the name of any nominee or
nominees of the Custodian or into the name or nominee name of
any agent appointed pursuant to Section 2.9 or into the name
or nominee name of any sub-custodian appointed pursuant to
Article 1; or for exchange for a different number of bonds,
certificates or other evidence representing the same aggregate
face amount or number of units; provided that, in any such
case, the new securities are to be delivered to the Custodian;
7) Upon the sale of such securities for the account of the
Company, to the broker or its clearing agent, against a
receipt, for examination in accordance with "street delivery"
custom; provided that in any such case, the Custodian shall
have no responsibility or liability for any loss arising from
the delivery of such securities prior to receiving payment for
such securities except as may arise from the Custodian's own
negligence or willful misconduct;
8) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or
readjustment of the securities of the issuer of such
securities, or pursuant to provisions for conversion contained
in such securities, or pursuant to any deposit agreement;
provided that, in any such case, the new securities and cash,
if any, are to be delivered to the Custodian;
9) In the case of warrants, rights or similar securities, the
surrender thereof in the exercise of such warrants, rights or
similar securities or the surrender of interim receipts or
temporary securities for definitive securities; provided that,
in any such case, the new securities and cash, if any, are to
be delivered to the Custodian;
10) For delivery in connection with any loans of securities made
by the Company, but only against receipt of adequate
collateral as agreed upon from time to time by the Custodian
and the Company, which may be in the form of cash or
obligations issued by the United States government, its
agencies or instrumentalities, except that in connection with
any loans for which collateral is to be credited to the
Custodian's account in the book-entry system authorized by the
U.S. Department of the Treasury, the Custodian will not be
held liable or responsible for the delivery of securities
owned by the Company prior to the receipt of such collateral;
11) For delivery as security in connection with any borrowings by
the Company requiring a pledge of assets by the Company, but
only against receipt of amounts borrowed;
12) For delivery in accordance with the provisions of any
agreement among the Company, the Custodian and a broker-dealer
registered under the Securities Exchange Act of 1934 (the
"Exchange Act") and a member of The National Association of
Securities Dealers, Inc. ("NASD"), relating to compliance with
the rules of The Options Clearing Corporation and of any
registered national securities exchange, or of any similar
organization or organizations, regarding escrow or other
arrangements in connection with transactions by the Company;
13) For delivery in accordance with the provisions of any
agreement among the Company, the Custodian, and a Futures
Commission Merchant registered under the Commodity Exchange
Act, relating to compliance with the rules of the Commodity
Futures Trading Commission and/or any contract market, or any
similar organization or organizations, regarding account
deposits in connection with transactions by the Company;
14) Upon receipt of instructions from the transfer agent
("Transfer Agent") for the Company, for delivery to such
Transfer Agent or to the holders of shares in connection with
distributions in kind, as may be described from time to time
in the Company's currently effective prospectus and statement
of additional information ("prospectus"), in satisfaction of
requests by holders of Shares for repurchase or redemption;
and
15) For any other proper corporate purpose, but only upon receipt
of Proper Instructions specifying the securities to be
delivered setting forth the purpose for which such delivery is
to be made, declaring such purpose to be a proper corporate
purpose, and naming the person or persons to whom delivery of
such securities shall be made.
2.3 Registration of Securities. Domestic securities held by the Custodian
(other than bearer securities) shall be registered in the name of the
Company or in the name of any nominee of the Company or of any nominee
of the Custodian which nominee shall be assigned exclusively to the
Company, unless the Company has authorized in writing the appointment
of a nominee to be used in common with other registered investment
companies having the same investment adviser as the Company, or in the
name or nominee name of any agent appointed pursuant to Section 2.9 or
in the name or nominee name of any sub-custodian appointed pursuant to
Article 1. All securities accepted by the Custodian on behalf of the
Company under the terms of this Contract shall be in "street name" or
other good delivery form. If, however, the Company directs the
Custodian to maintain securities in "street name", the Custodian shall
utilize its best efforts only to timely collect income due the Company
on such securities and to notify the Company on a best efforts basis
only of relevant corporate actions including, without limitation,
pendency of calls, maturities, tender or exchange offers.
2.4 Bank Accounts. The Custodian shall open and maintain a separate bank
account or accounts in the United States in the name of the Company,
subject only to draft or order by the Custodian acting pursuant to the
terms of this Contract, and shall hold in such account or accounts,
subject to the provisions hereof, all cash received by it from or for
the account of the Company, other than cash maintained by the Company
in a bank account established and used in accordance with Rule 17f-3
under the Investment Company Act of 1940. Funds held by the Custodian
for the Company may be deposited by it to its credit as Custodian in
the Banking Department of the Custodian or in such other banks or trust
companies as it may in its discretion deem necessary or desirable;
provided, however, that every such bank or trust company shall be
qualified to act as a custodian under the Investment Company Act of
1940 and that each such bank or trust company and the funds to be
deposited with each such bank or trust company shall be approved by
vote of a majority of the Board. Such funds shall be deposited by the
Custodian in its capacity as Custodian and shall be withdrawable by the
Custodian only in that capacity.
2.5 Availability of Federal Funds. Upon mutual agreement between the
Company and the Custodian, the Custodian shall, upon the receipt of
Proper Instructions, make federal funds available to the Company as of
specified times agreed upon from time to time by the Company and the
Custodian in the amount of checks received in payment for Shares of the
Company which are deposited into the Company's account.
2.6 Collection of Income. Subject to the provisions of Section 2.3, the
Custodian shall collect on a timely basis all income and other payments
with respect to United States registered securities held hereunder to
which the Company shall be entitled either by law or pursuant to custom
in the securities business, and shall collect on a timely basis all
income and other payments with respect to United States bearer
securities if, on the date of payment by the issuer, such securities
are held by the Custodian or its agent thereof and shall credit such
income, as collected, to the Company's custodian account. Without
limiting the generality of the foregoing, the Custodian shall detach
and present for payment all coupons and other income items requiring
presentation as and when they become due and shall collect interest
when due on securities held hereunder. Income due the Company on United
States securities loaned pursuant to the provisions of Section 2.2 (10)
shall be the responsibility of the Company. The Custodian will have no
duty or responsibility in connection therewith, other than to provide
the Company with such information or data as may be necessary to assist
the Company in arranging for the timely delivery to the Custodian of
the income to which the Company is properly entitled.
2.7 Payment of Company Monies. Upon receipt of Proper Instructions, which
may be continuing instructions when deemed appropriate by the parties,
the Custodian shall pay out monies of the Company in the following
cases only:
1) Upon the purchase of domestic securities, options, futures
contracts or options on futures contracts for the account of
the Company but only (a) against the delivery of such
securities, or evidence of title to such options, futures
contracts or options on futures contracts, to the Custodian
(or any bank, banking firm or trust company doing business in
the United States or abroad which is qualified under the
Investment Company Act of 1940, as amended, to act as a
custodian and has been designated by the Custodian as its
agent for this purpose) registered in the name of the Company
or in the name of a nominee of the Custodian referred to in
Section 2.3 hereof or in proper form for transfer; (b) in the
case of a purchase effected through a U.S. Securities System,
in accordance with the conditions set forth in Section 2.10
hereof; (c) in the case of a purchase involving the Direct
Paper System, in accordance with the conditions set forth in
Section 2.11; (d) in the case of repurchase agreements entered
into between the Company and the Custodian, or another bank,
or a broker-dealer which is a member of NASD, (i) against
delivery of the securities either in certificate form or
through an entry crediting the Custodian's account at the
Federal Reserve Bank with such securities or (ii) against
delivery of the receipt evidencing purchase by the Company of
securities owned by the Custodian along with written evidence
of the agreement by the Custodian to repurchase such
securities from the Company or (e) for transfer to a time
deposit account of the Company in any bank, whether domestic
or foreign; such transfer may be effected prior to receipt of
a confirmation from a broker and/or the applicable bank
pursuant to Proper Instructions from the Company as defined in
Article 5;
2) In connection with conversion, exchange or surrender of
securities owned by the Company as set forth in Section 2.2
hereof;
3) For the redemption or repurchase of Shares issued by the
Company as set forth in Article 4 hereof;
4) For the payment of any expense or liability incurred by the
Company, including but not limited to the following payments
for the account of the Company: interest, taxes, management,
accounting, transfer agent and legal fees, and operating
expenses of the Company whether or not such expenses are to be
in whole or part capitalized or treated as deferred expenses;
5) For the payment of any dividends declared pursuant to the governing
documents of the Company;
6) For payment of the amount of dividends received in respect of
securities sold short;
7) For any other proper purpose, but only upon receipt of Proper
Instructions specifying the amount of such payment, setting
forth the purpose for which such payment is to be made,
declaring such purpose to be a proper purpose, and naming the
person or persons to whom such payment is to be made.
2.8 Liability for Payment in Advance of Receipt of Securities Purchased.
Except as specifically stated otherwise in this Contact, in any and
every case where payment for purchase of domestic securities for the
account of the Company is made by the Custodian in advance of receipt
of the securities purchased in the absence of specific written
instructions from the Company to so pay in advance, the Custodian shall
be absolutely liable to the Company for such securities to the same
extent as if the securities had been received by the Custodian.
2.9 Appointment of Agents. The Custodian may at any time or times in its
discretion appoint (and may at any time remove) any other bank or trust
company which is itself qualified under the Investment Company Act of
1940, as amended, to act as a custodian, as its agent to carry out such
of the provisions of this Article 2 as the Custodian may from time to
time direct; provided, however, that the appointment of any agent shall
not relieve the Custodian of its responsibilities or liabilities
hereunder.
2.10 Deposit of Securities in U.S. Securities Systems. The Custodian may
deposit and/or maintain domestic securities owned by the Company in a
clearing agency registered with the Securities and Exchange Commission
under Section 17A of the Securities Exchange Act of 1934, which acts as
a securities depository, or in the book-entry system authorized by the
U.S. Department of the Treasury and certain federal agencies,
collectively referred to herein as "U.S. Securities System" in
accordance with applicable Federal Reserve Board and Securities and
Exchange Commission rules and regulations, if any, and subject to the
following provisions:
1) The Custodian may keep domestic securities of the Company in a
U.S. Securities System provided that such securities are
represented in an account ("Account") of the Custodian in the
U.S. Securities System which shall not include any assets of
the Custodian other than assets held as a fiduciary, custodian
or otherwise for customers;
2) The records of the Custodian with respect to domestic
securities of the Company which are maintained in a U.S.
Securities System shall identify by book-entry those
securities belonging to the Company;
3) The Custodian shall pay for domestic securities purchased for
the account of the Company upon (i) receipt of advice from the
U.S. Securities System that such securities have been
transferred to the Account, and (ii) the making of an entry on
the records of the Custodian to reflect such payment and
transfer for the account of the Company. The Custodian shall
transfer domestic securities sold for the account of the
Company upon (i) receipt of advice from the U.S. Securities
System that payment for such securities has been transferred
to the Account, and (ii) the making of an entry on the records
of the Custodian to reflect such transfer and payment for the
account of the Company. Copies of all advices from the U.S.
Securities System of transfers of domestic securities for the
account of the Company shall identify the Company, be
maintained for the Company by the Custodian and be provided to
the Company at its request. Upon request, the Custodian shall
furnish the Company confirmation of each transfer to or from
the account of the Company in the form of a written advice or
notice and shall furnish to the Company copies of daily
transaction sheets reflecting each day's transactions in the
U.S.
Securities System for the account of the Company.
4) The Custodian shall provide the Company with any report
obtained by the Custodian on the U.S. Securities System's
accounting system, internal accounting control and procedures
for safeguarding domestic securities deposited in the U.S.
Securities System;
5) Anything to the contrary in this Contract notwithstanding, the
Custodian shall be liable to the Company for any loss or
damage to the Company resulting from use of the U.S.
Securities System by reason of any negligence, misfeasance or
misconduct of the Custodian or any of its agents or of any of
its or their employees or from failure of the Custodian or any
such agent to enforce effectively such rights as it may have
against the U.S. Securities System; at the election of the
Company, it shall be entitled to be subrogated to the rights
of the Custodian with respect to any claim against the U.S.
Securities System or any other person which the Custodian may
have as a consequence of any such loss or damage if and to the
extent that the Company has not been made whole for any such
loss or damage.
2.11 Company Assets Held in the Custodian's Direct Paper System. The
Custodian may deposit and/or maintain securities owned by the Company
in the Direct Paper System of the Custodian subject to the following
provisions:
1) No transaction relating to securities in the Direct Paper
System will be effected in the absence of Proper Instructions;
2) The Custodian may keep securities of the Company in the Direct
Paper System only if such securities are represented in an
account ("Account") of the Custodian in the Direct Paper
System which shall not include any assets of the Custodian
other than assets held as a fiduciary, custodian or otherwise
for customers;
3) The records of the Custodian with respect to securities of the
Company which are maintained in the Direct Paper System shall
identify by book-entry those securities belonging to the
Company;
4) The Custodian shall pay for securities purchased for the
account of the Company upon the making of an entry on the
records of the Custodian to reflect such payment and transfer
of securities to the account of the Company. The Custodian
shall transfer securities sold for the account of the Company
upon the making of an entry on the records of the Custodian to
reflect such transfer and receipt of payment for the account
of the Company;
5) The Custodian shall furnish the Company confirmation of each
transfer to or from the account of the Company, in the form of
a written advice or notice, of Direct Paper on the next
business day following such transfer and shall furnish to the
Company copies of daily transaction sheets reflecting each
day's transaction in the U.S. Securities System for the
account of the Company;
6) The Custodian shall provide the Company with any report on its
system of internal accounting control as the Company may
reasonably request from time to time;
2.12 Segregated Account. The Custodian shall upon receipt of Proper
Instructions establish and maintain a segregated account or accounts
for and on behalf of the Company, into which account or accounts may be
transferred cash and/or securities, including securities maintained in
an account by the Custodian pursuant to Section 2.10 hereof, (i) in
accordance with the provisions of any agreement among the Company, the
Custodian and a broker-dealer registered under the Exchange Act and a
member of the NASD (or any futures commission merchant registered under
the Commodity Exchange Act), relating to compliance with the rules of
The Options Clearing Corporation and of any registered national
securities exchange (or the Commodity Futures Trading Commission or any
registered contract market), or of any similar organization or
organizations, regarding escrow or other arrangements in connection
with transactions by the Company, (ii) for purposes of segregating cash
or government securities in connection with options purchased, sold or
written by the Company or commodity futures contracts or options
thereon purchased or sold by the Company, (iii) for the purposes of
compliance by the Company with the procedures required by Investment
Company Act Release No. 10666, or any subsequent release or releases of
the Securities and Exchange Commission relating to the maintenance of
segregated accounts by registered investment companies and (iv) for
other proper corporate purposes, but only, in the case of clause (iv),
upon receipt of Proper Instructions setting forth the purpose or
purposes of such segregated account and declaring such purposes to be
proper corporate purposes.
2.13 Ownership Certificates for Tax Purposes. The Custodian shall execute
ownership and other certificates and affidavits for all federal and
state tax purposes in connection with receipt of income or other
payments with respect to domestic securities of the Company held by it
and in connection with transfers of such securities.
2.14 Proxies. The Custodian shall, with respect to the domestic securities
held hereunder, cause to be promptly executed by the registered holder
of such securities, if the securities are registered otherwise than in
the name of the Company or a nominee of the Company, all proxies,
without indication of the manner in which such proxies are to be voted,
and shall
promptly deliver to the Company such proxies, all proxy soliciting
materials and all notices relating to such securities.
2.15 Communications Relating to Company Portfolio Securities. Subject to the
provisions of Section 2.3, the Custodian shall transmit promptly to the
Company all written information (including, without limitation,
pendency of calls and maturities of domestic securities and expirations
of rights in connection therewith and notices of exercise of call and
put options written by the Company and the maturity of futures
contracts purchased or sold by the Company) received by the Custodian
from issuers of the domestic securities being held for the Company.
With respect to tender or exchange offers, the Custodian shall transmit
promptly to the Company all written information received by the
Custodian from issuers of the domestic securities whose tender or
exchange is sought and from the party (or his agents) making the tender
or exchange offer. If the Company desires to take action with respect
to any tender offer, exchange offer or any other similar transaction,
the Company shall notify the Custodian at least three business days
prior to the date on which the Custodian is to take such action.
2.16 Reports to Company by Independent Public Accountants. The Custodian
shall provide the Company, at such times as the Company may reasonably
require, with reports by independent public accountants on the
accounting system, internal accounting control and procedures for
safeguarding securities, futures contracts and options on futures
contracts, including domestic securities deposited and/or maintained in
a U.S. Securities System, relating to the services provided by the
Custodian under this Contract; such reports shall be of sufficient
scope and in sufficient detail, as may reasonably be required by the
Company to provide reasonable assurance that any material inadequacies
would be disclosed by such examination, and, if there are no such
inadequacies, the reports shall so state.
2.17 Services Relating to Loans. The Custodian shall perform certain
additional services with respect to the Company's Loans as described on
the Loan Services Addendum hereto.
3. Duties of the Custodian with Respect to Property of the Company Held
Outside of the United States
3.1 Appointment of Foreign Sub-Custodians. The Company hereby authorizes
and instructs the Custodian to employ as sub-custodians for the
Company's securities and other assets maintained outside the United
States the foreign banking institutions and foreign securities
depositories designated on Schedule A hereto ("foreign
sub-custodians"). Upon receipt of "Proper Instructions", as defined in
Section 5 of this Contract, together with an approval by the Company
signed by an authorized officer of the Company, the Custodian and the
Company may agree to amend Schedule A hereto from time to time to
designate additional foreign banking institutions and foreign
securities depositories to act as sub-custodian. Upon receipt of Proper
Instructions, the Company may instruct the Custodian to cease the
employment of any one or more such sub-custodians for maintaining
custody of the Company's assets.
3.2 Assets to be Held. The Custodian shall limit the securities and other
assets maintained in the custody of the foreign sub-custodians to: (a)
"foreign securities", as defined in paragraph (c)(1) of Rule 17f-5
under the Investment Company Act of 1940, and (b) cash and cash
equivalents in such amounts as the Custodian or the Company may
determine to be reasonably necessary to effect the Company's foreign
securities transactions. The Custodian shall identify on its books as
belonging to the Company, the foreign securities of the Company held by
each foreign sub-custodian.
3.3 Foreign Securities Systems. Except as may otherwise be agreed upon in
writing by the Custodian and the Company, assets of the Company shall
be maintained in a clearing agency which acts as a securities
depository or in a book-entry system for the central handling of
securities located outside the United States (each, a "Foreign
Securities System") only through arrangements implemented by the
foreign banking institutions serving as sub-custodians pursuant to the
terms hereof (Foreign Securities Systems and U.S. Securities Systems
are collectively referred to herein as the "Securities System"). Where
possible, such arrangements shall include entry into agreements
containing the provisions set forth in Section 3.5 hereof.
3.4 Holding Securities. The Custodian may hold securities and other
non-cash property for all of its customers, including the Company, with
a foreign sub-custodian in a single account that is identified as
belonging to the Custodian for the benefit of its customers, provided
however, that (i) the records of the Custodian with respect to
securities and other non-cash property of the Company which are
maintained in such account shall identify by book-entry those
securities and other non-cash property belonging to the Company and
(ii) the Custodian shall require that securities and other non-cash
property so held by the foreign sub-custodian be held separately from
any assets of the foreign sub-custodian or of others.
3.5 Agreements with Foreign Banking Institutions. Each agreement with a
foreign banking institution shall provide that: (a) the Company's
assets will not be subject to any right, charge, security interest,
lien or claim of any kind in favor of the foreign banking institution
or its creditors or agent, except a claim of payment for their safe
custody or administration; (b) beneficial ownership of the Company's
assets will be freely transferable without the payment of money or
value other than for custody or administration; (c) adequate records
will be maintained identifying the assets as belonging to the Company;
(d) officers of or auditors employed by, or other representatives of
the Custodian, including to the extent permitted under applicable law
the independent public accountants for the Company, will be given
access to the books and records of the foreign banking institution
relating to its actions under its agreement with the Custodian; and (e)
assets of the Company held by the foreign sub-custodian will be subject
only to the instructions of the Custodian or its agents.
3.6 Access of Independent Accountants of the Company. Upon request of the
Company, the Custodian will use its best efforts to arrange for the
independent accountants of the Company to be afforded access to the
books and records of any foreign banking institution employed as a
foreign sub-custodian insofar as such books and records relate to the
performance of such foreign banking institution under its agreement
with the Custodian.
3.7 Reports by Custodian. The Custodian will supply to the Company from
time to time, as mutually agreed upon, statements in respect of the
securities and other assets of the Company held by foreign
sub-custodians, including but not limited to an identification of
entities having possession of the Company's securities and other assets
and advices or notifications of any transfers of securities to or from
each custodial account maintained by a foreign banking institution for
the Custodian on behalf of the Company indicating, as to securities
acquired for the Company, the identity of the entity having physical
possession of such securities.
3.8 Transactions in Foreign Custody Account. (a) Except as otherwise
provided in paragraph (b) of this Section 3.8, the provision of
Sections 2.2 and 2.7 of this Contract shall apply, mutatis mutandis to
the foreign securities of the Company held outside the United States by
foreign sub-custodians. (b) Notwithstanding any provision of this
Contract to the contrary, settlement and payment for securities
received for the account of the Company and delivery of securities
maintained for the account of the Company may be effected in accordance
with the customary established securities trading or securities
processing practices and procedures in the jurisdiction or market in
which the transaction occurs, including, without limitation, delivering
securities to the purchaser thereof or to a dealer therefor (or an
agent for such purchaser or dealer) against a receipt with the
expectation of receiving later payment for such securities from such
purchaser or dealer. (c) Securities maintained in the custody of a
foreign sub-custodian may be maintained in the name of such entity's
nominee to the same extent as set forth in Section 2.3 of this
Contract, and the Company agrees to hold any such nominee harmless from
any liability as a holder of record of such securities.
3.9 Liability of Foreign Sub-Custodians. Each agreement pursuant to which
the Custodian employs a foreign banking institution as a foreign
sub-custodian shall require the institution to exercise reasonable care
in the performance of its duties and to indemnify, and hold harmless,
the Custodian and each Company from and against any loss, damage, cost,
expense, liability or claim arising out of or in connection with the
institution's performance of such obligations. At the election of the
Company, it shall be entitled to be subrogated to the rights of the
Custodian with respect to any claims against a foreign banking
institution as a consequence of any such loss, damage, cost, expense,
liability or claim if and to the extent that the Company has not been
made whole for any such loss, damage, cost, expense, liability or
claim.
3.10 Liability of Custodian. The Custodian shall be liable for the acts or
omissions of a foreign banking institution to the same extent as set
forth with respect to sub-custodians generally in this Contract and,
regardless of whether assets are maintained in the custody of a foreign
banking institution, a foreign securities depository or a branch of a
U.S. bank as contemplated by paragraph 3.13 hereof, the Custodian shall
not be liable for any loss, damage, cost, expense, liability or claim
resulting from nationalization, expropriation, currency restrictions,
or acts of war or terrorism or any loss where the sub-custodian has
otherwise exercised reasonable care. Notwithstanding the foregoing
provisions of this paragraph 3.10, in delegating custody duties to
State Street London Ltd., the Custodian shall not be relieved of any
responsibility to the Company for any loss due to such delegation,
except such loss as may result from (a) political risk (including, but
not limited to, exchange control restrictions, confiscation,
expropriation, nationalization, insurrection, civil strife or armed
hostilities) or (b) other losses (excluding a bankruptcy or insolvency
of State Street London Ltd. not caused by political risk) due to Acts
of God, nuclear incident or other losses under circumstances where the
Custodian and State Street London Ltd. have exercised reasonable care.
3.11 Reimbursement for Advances. If the Company requires the Custodian to
advance cash or securities for any purpose including the purchase or
sale of foreign exchange or of contracts for foreign exchange, or in
the event that the Custodian or its nominee shall incur or be assessed
any taxes, charges, expenses, assessments, claims or liabilities in
connection with the performance of this Contract, except such as may
arise from its or its nominee's own negligent action, negligent failure
to act or willful misconduct, any property at any time held for the
account of the Company shall be security therefor and should the
Company fail to repay the Custodian promptly, the Custodian shall be
entitled to utilize available cash and to dispose of the Company assets
to the extent necessary to obtain reimbursement.
3.12 Monitoring Responsibilities. The Custodian shall furnish annually to
the Company, during the month of June, information concerning the
foreign sub-custodians employed by the Custodian. Such information
shall be similar in kind and scope to that furnished to the Company in
connection with the initial approval of this Contract. In addition, the
Custodian will promptly inform the Company in the event that the
Custodian learns of a material adverse change in the financial
condition of a foreign sub-custodian or any material loss of the assets
of the Company or in the case of any foreign sub-custodian not the
subject of an exemptive order from the Securities and Exchange
Commission is notified by such foreign sub-custodian that there appears
to be a substantial likelihood that its shareholders' equity will
decline below $200 million (U.S. dollars or the equivalent thereof) or
that its shareholders' equity has declined below $200 million (in each
case computed in accordance with generally accepted U.S. accounting
principles).
3.13 Branches of U.S. Banks. (a) Except as otherwise set forth in this
Contract, the provisions hereof shall not apply where the custody of
the Company assets are maintained in a foreign branch of a banking
institution which is a "bank" as defined by Section 2(a)(5) of the
Investment Company Act of 1940 meeting the qualification set forth in
Section 26(a) of said Act. The appointment of any such branch as a
sub-custodian shall be governed by paragraph 1 of this Contract. (b)
Cash held for the Company in the United Kingdom shall be maintained in
an interest bearing account established for the Company with the
Custodian's London branch, which account shall be subject to the
direction of the Custodian.
3.14 Tax Law. The Custodian shall have no responsibility or liability for
any obligations now or hereafter imposed on the Company or the
Custodian as custodian of the Company by the tax law of the United
States of America or any state or political subdivision thereof. It
shall be the responsibility of the Company to notify the Custodian of
the obligations imposed on the Company or the Custodian as custodian of
the Company by the tax law of jurisdictions other than those mentioned
in the above sentence, including responsibility for withholding and
other taxes, assessments or other governmental charges, certifications
and governmental reporting. The sole responsibility of the Custodian
with regard to such tax law shall be to use reasonable efforts to
assist the Company with respect to any claim for exemption or refund
under the tax law of jurisdictions for which the Company has provided
such information.
4. Payments for Repurchases or Redemptions and Sales of Shares of the
Company
From such funds as may be available for the purpose, but subject to any
applicable votes of the Board pursuant thereto, the Custodian shall, upon
receipt of instructions from the Transfer Agent, make funds available each
quarter for payment to holders of Shares who have delivered to the Transfer
Agent a request for redemption or repurchase of their Shares. In connection with
the redemption or repurchase of Shares of the Company, the Custodian is
authorized upon receipt of instructions from the Transfer Agent to wire funds to
or through a commercial bank designated by the redeeming shareholders. In
connection with the redemption or repurchase of Shares of the Company, the
Custodian shall honor checks drawn on the Custodian by a holder of Shares, which
checks have been furnished by the Company to the holder of Shares, when
presented to the Custodian in accordance with such procedures and controls as
are mutually agreed upon from time to time between the Company and the
Custodian.
The Custodian shall receive from the distributor for the Company's
Shares or from the Transfer Agent of the Company and deposit into the Company's
account such payments as are received for Shares of the Company issued or sold
from time to time by the Company. The Custodian will provide timely notification
to the Company and the Transfer Agent of any receipt by it of payments for
Shares of the Company.
5. Proper Instructions
Proper Instructions as used herein means a writing signed or initialed
by one or more person or persons as the Board shall have from time to time
authorized. Each such writing shall set forth the specific transaction or type
of transaction involved, including a specific statement of the purpose for which
such action is requested. Oral instructions will be considered Proper
Instructions if the Custodian reasonably believes them to have been given by a
person authorized to give such instructions with respect to the transaction
involved. The Company shall cause all oral instructions to be confirmed in
writing. Proper Instructions may include communications effected directly
between electro-mechanical or electronic devices provided that the instructions
are consistent with the security procedures agreed to by the Company and the
Custodian including, but not limited to, the security procedures selected by the
Company on the Funds Transfer Addendum to this Contract. For purposes of this
Section, Proper Instructions shall include instructions received by the
Custodian pursuant to any three-party agreement which requires a segregated
asset account in accordance with Section 2.12.
6. Actions Permitted without Express Authority
The Custodian may in its discretion, without express authority from the
Company:
1) make payments to itself or others for minor expenses of
handling securities or other similar items relating to its
duties under this Contract, provided that all such payments
shall be accounted for to the Company;
2) surrender securities in temporary form for securities in
definitive form;
3) endorse for collection, in the name of the Company,
checks, drafts and other negotiable instruments; and
4) in general, attend to all non-discretionary details in
connection with the sale, exchange, substitution, purchase,
transfer and other dealings with the securities and property
of the Company except as otherwise directed by the Board.
7. Evidence of Authority
The Custodian shall be protected in acting upon any instructions,
notice, request, consent, certificate or other instrument or paper believed by
it to be genuine and to have been properly executed by or on behalf of the
Company. The Custodian may receive and accept a certified copy of a vote of the
Board as conclusive evidence (a) of the authority of any person to act in
accordance with such vote or (b) of any determination or of any action by the
Board as described in such vote, and such vote may be considered as in full
force and effect until receipt by the Custodian of written notice to the
contrary.
8. Duties of Custodian with Respect to the Books of Account and
Calculation of Net Asset Value and Net Income
The Custodian shall cooperate with and supply necessary information to
the entity or entities appointed by the Board to keep the books of account of
the Company and/or compute the net asset value per share of the outstanding
shares of the Company or, if directed in writing to do so by the Company, shall
itself keep such books of account and/or compute such net asset value per share.
If so directed, the Custodian shall also calculate daily the net income of the
Company as described in the Company's currently effective prospectus and shall
advise the Company and the Transfer Agent daily of the total amounts of such net
income and, if instructed in writing by an officer of the Company to do so,
shall advise the Transfer Agent periodically of the division of such net income
among its various components. The calculations of the net asset value per share
and the daily income of the Company shall be made at the time or times described
from time to time in the Company's currently effective prospectus.
9. Records
The Custodian shall create and maintain all records relating to its
activities and obligations under this Contract in such manner as will meet the
obligations of the Company under the Investment Company Act of 1940, with
particular attention to Section 31 thereof and Rules 31a-1 and 31a-2 thereunder.
All such records shall be the property of the Company and shall at all times
during the regular business hours of the Custodian be open for inspection by
duly authorized officers, employees or agents of the Company and employees and
agents of the Securities and Exchange Commission. The Custodian shall, at the
Company's request, supply the Company with a tabulation of securities owned by
the Company and held by the Custodian and shall, when requested to do so by the
Company and for such compensation as shall be agreed upon between the Company
and the Custodian, include certificate numbers in such tabulations.
10. Opinion of Company's Independent Accountant
The Custodian shall take all reasonable action, as the Company may from
time to time request, to obtain from year to year favorable opinions from the
Company's independent accountants with respect to its activities hereunder in
connection with the preparation of the Company's Form N-1A, and Form N-SAR or
other annual reports to the Securities and Exchange Commission and with respect
to any other requirements of such Commission.
11. Compensation of Custodian
The Custodian shall be entitled to reasonable compensation for its
services and expenses as Custodian, as agreed upon from time to time between the
Company and the Custodian.
12. Responsibility of Custodian
So long as and to the extent that it is in the exercise of reasonable
care, the Custodian shall not be responsible for the title, validity or
genuineness of any property or evidence of title thereto received by it or
delivered by it pursuant to this Contract and shall be held harmless in acting
upon any notice, request, consent, certificate or other instrument reasonably
believed by it to be genuine and to be signed by the proper party or parties,
including any futures commission merchant acting pursuant to the terms of a
three-party futures or options agreement. The Custodian shall be held to the
exercise of reasonable care in carrying out the provisions of this Contract, but
shall be kept indemnified by and shall be without liability to the Company for
any action taken or omitted by it in good faith without negligence. It shall be
entitled to rely on and may act upon advice of counsel (who may be counsel for
the Company) on all matters, and shall be without liability for any action
reasonably taken or omitted pursuant to such advice.
Except as may arise from the Custodian's own negligence or willful
misconduct or the negligence or willful misconduct of a sub-custodian or agent,
the Custodian shall be without liability to the Company for any loss, liability,
claim or expense resulting from or caused by; (i) events or circumstances beyond
the reasonable control of the Custodian or any sub-custodian or Securities
System or any agent or nominee of any of the foregoing, including, without
limitation, nationalization or expropriation, imposition of currency controls or
restrictions, the interruption, suspension or restriction of trading on or the
closure of any securities market, power or other mechanical or technological
failures or interruptions, computer viruses or communications disruptions, acts
of war or terrorism, riots, revolutions, work stoppages, natural disasters or
other similar events or acts; (ii) errors by the Company or the Investment
Advisor in their instructions to the Custodian provided such instructions have
been in accordance with this Contract; (iii) the insolvency of or acts or
omissions by a Securities System; (iv) any delay or failure of any broker, agent
or intermediary, central bank or other commercially prevalent payment or
clearing system to deliver to the Custodian's sub-custodian or agent securities
purchased or in the remittance or payment made in connection with securities
sold; (v) any delay or failure of any company, corporation, or other body in
charge of registering or transferring securities in the name of the Custodian,
the Company, the Custodian's sub-custodians, nominees or agents or any
consequential losses arising out of such delay or failure to transfer such
securities including non-receipt of bonus, dividends and rights and other
accretions or benefits; (vi) delays or inability to perform its duties due to
any disorder in market infrastructure with respect to any particular security or
Securities System; and (vii) any provision of any present or future law or
regulation or order of the United States of America, or any state thereof, or
any other country, or political subdivision thereof or of any court of competent
jurisdiction.
The Custodian shall be liable for the acts or omissions of a foreign
banking institution to the same extent as set forth with respect to
sub-custodians generally in this Contract.
If the Company requires the Custodian to take any action with respect
to securities, which action involves the payment of money or which action may,
in the opinion of the Custodian, result in the Custodian or its nominee assigned
to the Company being liable for the payment of money or incurring liability of
some other form, the Company, as a prerequisite to requiring the Custodian to
take such action, shall provide indemnity to the Custodian in an amount and form
satisfactory to it.
If the Company requires the Custodian, its affiliates, subsidiaries or
agents, to advance cash or securities for any purpose (including but not limited
to securities settlements, foreign exchange contracts and assumed settlement) or
in the event that the Custodian or its nominee shall incur or be assessed any
taxes, charges, expenses, assessments, claims or liabilities in connection with
the performance of this Contract, except such as may arise from its or its
nominee's own negligent action, negligent failure to act or willful misconduct,
any property at any time held for the account of the Company shall be security
therefor and should the Company fail to repay the Custodian promptly, the
Custodian shall be entitled to utilize available cash and to dispose of the
Company assets to the extent necessary to obtain reimbursement.
In no event shall the Custodian be liable for indirect, special or
consequential damages.
13. Effective Period, Termination and Amendment
This Contract shall become effective as of its execution, shall
continue in full force and effect until terminated as hereinafter provided, may
be amended at any time by mutual agreement of the parties hereto and may be
terminated by either party by an instrument in writing delivered or mailed,
postage prepaid to the other party, such termination to take effect not sooner
than thirty (30) days after the date of such delivery or mailing; provided,
however, that the Company shall not amend or terminate this Contract in
contravention of any applicable federal or state regulations, or any provision
of the Company's constitutive documents, and further provided, that the Company
may at any time by action of its Board (i) substitute another bank or trust
company for the Custodian by giving notice as described above to the Custodian,
or (ii) immediately terminate this Contract in the event of the appointment of a
conservator or receiver for the Custodian by the Comptroller of the Currency or
upon the happening of a like event at the direction of an appropriate regulatory
agency or court of competent jurisdiction.
Upon termination of the Contract, the Company shall pay to the
Custodian such compensation as may be due as of the date of such termination and
shall likewise reimburse the Custodian for its costs, expenses and
disbursements.
14. Successor Custodian
If a successor custodian shall be appointed by the Board, the Custodian
shall, upon termination, deliver to such successor custodian at the office of
the Custodian, duly endorsed and in the form for transfer, all securities then
held by it hereunder and shall transfer to an account of the successor custodian
all of the Company's securities held in a Securities System.
If no such successor custodian shall be appointed, the Custodian shall,
in like manner, upon receipt of a certified copy of a vote of the Board, deliver
at the office of the Custodian and transfer such securities, funds and other
properties in accordance with such vote.
In the event that no written order designating a successor custodian or
certified copy of a vote of the Board shall have been delivered to the Custodian
on or before the date when such termination shall become effective, then the
Custodian shall have the right to deliver to a bank or trust company, which is a
"bank" as defined in the Investment Company Act of 1940, doing business in
Boston, Massachusetts, of its own selection, having an aggregate capital,
surplus, and undivided profits, as shown by its last published report, of not
less than $25,000,000, all securities, funds and other properties held by the
Custodian and all instruments held by the Custodian relative thereto and all
other property held by it under this Contract and to transfer to an account of
such successor custodian all of the Company's securities held in any Securities
System. Thereafter, such bank or trust company shall be the successor of the
Custodian under this Contract.
In the event that securities, funds and other properties remain in the
possession of the Custodian after the date of termination hereof owing to
failure of the Company to procure the certified copy of the vote referred to or
of the Board to appoint a successor custodian, the Custodian shall be entitled
to fair compensation for its services during such period as the Custodian
retains possession of such securities, funds and other properties and the
provisions of this Contract relating to the duties and obligations of the
Custodian shall remain in full force and effect.
15. Interpretive and Additional Provisions
In connection with the operation of this Contract, the Custodian and
the Company may from time to time agree on such provisions interpretive of or in
addition to the provisions of this Contract as may in their joint opinion be
consistent with the general tenor of this Contract. Any such interpretive or
additional provisions shall be in a writing signed by both parties and shall be
annexed hereto, provided that no such interpretive or additional provisions
shall contravene any applicable federal or state regulations or any provision of
the Company's constitutive documents. No interpretive or additional provisions
made as provided in the preceding sentence shall be deemed to be an amendment of
this Contract.
16. Massachusetts Law to Apply
This Contract shall be construed and the provisions thereof interpreted
under and in accordance with laws of the Commonwealth of Massachusetts.
17. Prior Contracts
This Contract supersedes and terminates, as of the date hereof, all
prior contracts between the Company and the Custodian relating to the custody of
the Company's assets.
18. Reproduction of Documents
This Contract and all schedules, exhibits, attachments and amendments
hereto may be reproduced by any photographic, photostatic, microfilm,
micro-card, miniature photographic or other similar process. The parties hereto
all/each agree that any such reproduction shall be admissible in evidence as the
original itself in any judicial or administrative proceeding, whether or not the
original is in existence and whether or not such reproduction was made by a
party in the regular course of business, and that any enlargement, facsimile or
further reproduction of such reproduction shall likewise be admissible in
evidence.
19. Shareholder Communications Election
Securities and Exchange Commission Rule 14b-2 requires banks which hold
securities for the account of customers to respond to requests by issuers of
securities for the names, addresses and holdings of beneficial owners of
securities of that issuer held by the bank unless the beneficial owner has
expressly objected to disclosure of this information. In order to comply with
the rule, the Custodian needs the Company to indicate whether it authorizes the
Custodian to provide the Company's name, address, and share position to
requesting companies whose securities the Company owns. If the Company tells the
Custodian "no", the Custodian will not provide this information to requesting
companies. If the Company tells the Custodian "yes" or does not check either
"yes" or "no" below, the Custodian is required by the rule to treat the Company
as consenting to disclosure of this information for all securities owned by the
Company or any funds or accounts established by the Company. For the Company's
protection, the Rule prohibits the requesting company from using the Company's
name and address for any purpose other than corporate communications. Please
indicate below whether the Company consents or objects by checking one of the
alternatives below.
YES [ ] The Custodian is authorized to release the Company's name,
address, and share positions.
NO [X] The Custodian is not authorized to release the Company's name,
address, and share positions.
20. Data Access Services Addendum
The Custodian and the Company agree to be bound by the terms of the
Remote Access Services Addendum attached hereto.
[The remainder of this page is intentionally left blank.]
IN WITNESS WHEREOF, each of the parties has caused this instrument to
be executed in its name and behalf by its duly authorized representative and its
seal to be hereunder affixed as of _______________.
*date
LIBERTY-XXXXX XXX ADVISOR FLOATING RATE
Attested to by: ADVANTAGE FUND
____________________ By: _________________________
*[title]
Name: _________________________
Title: _________________________
STATE STREET BANK and TRUST COMPANY
Attested to by::
____________________ By: _________________________
VP & Assoc. Counsel
Name: Xxxxxx X. Xxxxx
Title: Vice Chairman
